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Fringe Benefits Tax Returns – What you need to know

Fringe Benefits Tax (FBT) Returns are due on June 25th 2023!

What is fringe benefits tax?

Fringe benefits tax (FBT) is a tax paid by employers on certain benefits provided to their employees, or to their employees’ family or other associates.

FBT is separate to income tax. It’s calculated on the taxable value of the fringe benefit.

As an employer, you must self-assess your FBT liability for the FBT year (1 April to 31 March). If you have an FBT liability, you must lodge an FBT return and pay the FBT you owe.

What is a fringe benefit?

A fringe benefit is like a payment to an employee, but in a different form to salary or wages.

There are different types of fringe benefits. Examples include:

  • allowing an employee to use a work car for private purposes
  • car parking
  • paying an employee’s gym membership
  • providing entertainment by way of free tickets to concerts
  • reimbursing an expense incurred by an employee, such as school fees
  • giving an employee a discounted loan
  • giving benefits under a salary sacrifice arrangement with an employee.

The following are not fringe benefits:

  • salary and wages
  • employer contributions to complying super funds
  • shares or rights provided under approved employee share acquisition schemes
  • employment termination payments (including, for example, the gift or sale at a discount of a company car to an employee on termination)
  • payments deemed to be dividends under Division 7A
  • benefits provided to volunteers and contractors
  • exempt benefits, such as certain benefits provided by religious institutions to their religious practitioners.

Who does fringe benefits tax apply to?

FBT applies to fringe benefits provided to your employees, or to your employees’ families or other associates.

For FBT purposes, an employee includes a:

  • current, future or past employee
  • director of a company
  • beneficiary of a trust who works in the business

If you’re a sole trader or a partner in a partnership, you are not an employee. Benefits you provide to yourself are not subject to FBT.

Your clients are not employees. Benefits you provide to clients, such as entertainment, are not subject to FBT.

Not sure? Contact your accountant today!

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